Field Marshal Abdel Fattah el-Sisi formally declared his intention to run for president of Egypt on March 26 and is widely expected to win. Yet his administration will have to confront a range of delicate issues within a deeply divided political climate.
What is the outlook for Egypt under Sisi’s leadership? What challenges lie ahead for Egypt’s economic recovery, and what can be expected in terms of domestic political dynamics, overall stability, and foreign policy?
Four experts weigh in with their views on the Egypt’s future. Please join the discussion by sharing your own views in the comments section.
Facing up to Economic Realities
Mustansir Barma
Mustansir Barma, a Nairobi-based policy analyst and political economist and former senior economic researcher at the American Chamber of Commerce in Egypt.
“Very difficult.” Those two words summed up presumed presidential frontrunner Abdel Fattah el-Sisi’s recent take on Egypt’s economic condition. This is perhaps an apt conclusion considering double-digit inflation and unemployment, a hole in the budget that amounts to 12 percent of the Gross Domestic Product (GDP), and another year of missed economic growth targets.
Sisi has announced parts of his economic strategy—a recent deal with an Emirati firm will see one million new low-income housing units built, and restarting Egypt’s nuclear program is key to Sisi’s approach to tackling the country’s energy crisis. While such programs are all well and good, Sisi has a real opportunity to put Egypt on an economic recovery path that will be sustainable in the long run. To do this, he will need to break out of the cycle of dependence on Egypt’s neighbors and make the tough decisions that will more often than not be out of sync with populist demands.
The challenge for Sisi will be to move away from handouts and start some real economic reforms. Since Mohamed Morsi’s ouster, Egypt has received over $15 billion in mixed assistance from Saudi Arabia, the United Arab Emirates, and Kuwait. The inflows have helped with a range of issues from currency stabilization to abating energy shortages. However, these injections are only temporary fixes that will ultimately discourage political will for meaningful reform. Expansionary strategies since the 2011 uprising have only worsened Egypt’s fiscal situation, as public debt fast approaches 100 percent of GDP. Favoring a “balanced budget” approach by financing growth with stable long-term investment would help Egypt break out of its vicious trio of subsidies, wages, and interest payments, each of which eats up about a quarter of government expenditures.
Sisi’s big test in accomplishing this will be to resist employing heavy-handed tactics and instead promote inclusive economic decision-making. Recognizing the importance of security restoration in rebuilding investor confidence, the defense minister has made this priority number one. However, the hardline approach that has all but eliminated the Muslim Brotherhood is not the way. Suppressing an environment that enables a range of voices is a pitfall that Sisi will struggle to avoid.
“Stop making demands and start working,” says the exasperated finance minister; while the labor minister has moved to enact a twelve-month ban on worker strikes. Such heavy-handed unilateral statements and actions are likely to backfire. A Sisi presidency would benefit from bringing workers to the table by empowering independent unions rather than outlawing them. Citizens should be involved in the budget-making process, and both the good and the bad sides of decisions such as the gradual elimination of food and fuel subsidies should be clearly communicated. Participatory budgeting would be a great way for Sisi to keep his mandate democratic and to not fall into Morsi’s trap, whose only democratic act was to get elected. Inclusiveness is key, and Sisi would do well to balance pragmatism with the memory of the cries for “bread, freedom, and social justice” from Tahrir Square.
No Room for Dissent
Yasser El-Shimy
Yasser El-Shimy, teaching fellow, Boston University.
The anti-democratic forces unleashed by the July 3 military overthrow of President Mohamed Morsi are bound to continue with vigor, particularly as Field Marshall Abdel Fattah al-Sisi readies to get a promotion to the presidency. July 3 did not simply represent an end at gunpoint to Egypt’s democratization path, albeit fraught with flaws; it represented an end to politics itself. Sisi’s mission is two-fold: to consolidate a military-led political order and to embark on a large-scale nation-building program funded by anti-Islamist Gulf monarchies, managed by army generals (and some technocrats), and executed by labor working in desperate conditions.
Genuine pluralistic politics run counter to such ambitions, but the pretenses must go on. In order to secure a resumption of U.S. military aid, the procedural machinations of a democratic system will endure. Thus Egypt had a constitutional referendum, where 98 percent of the voters approved a deeply divisive draft (those campaigning for a “No” vote were sentenced to prison), and will have parliamentary elections in which the political group that won a majority in the last round is not allowed to compete. Washington is supposed to buy into this scheme, if it does not want Moscow to become the new patron for Cairo’s rulers. Egypt is not harkening back to the days of Mubarak’s dictatorship, to be sure. Hosni Mubarak, at least, went through the trouble of setting up a political party, and the inconvenience of allowing some space for free expression. The new arrangements lack subtleties, but with seemingly unending Gulf aid, such niceties appear unnecessary.
Military-dominated politics leave little room for dissent, with opposing voices now associated with either treason or support for terrorism. Human rights are an afterthought. The ruling generals see this heavy-handed approach as the only option to save a country rocked by relentless protests, plummeting economic indicators, and destabilizing foreign interference. To them, a nation with over a quarter of the populace living below the poverty line and a 50 percent illiteracy rate cannot afford the luxuries of democracy and human rights. Egypt needs order, not freedoms of assembly and expression. If Cairo is to climb out of the rut, Egyptians must follow the army’s plan, not debate its wisdom or feasibility, so goes the reasoning.
In the new-old Egypt, there is no room for Islamists. Non-Islamists, as diverse as they are, have a choice: play the role of Mubarak’s old secular opposition—cartoonish, acquiescent, and irrelevant—or be shut out. Some of them are playing along out of greed or fear; others are jailed or otherwise silenced. The drums of the “war on terror” beat ever louder, especially as many Islamists predictably radicalize in response to the repression. In a cynical way, the new regime’s raison d’etre becomes derived from fighting the monsters it has itself helped create.
As peaceful political participation and expression is blocked, other forms flourish, including protests, riots, subversive graffiti, and, more ominously, violent attacks against government personnel and facilities. This, in turn, further undermines an already fragile economy, fueling a downward spiral of economic underperformance and socio-political instability. An army-led economic revival may never materialize.
Some bank on a reconciliatory President Sisi to heal the nation, but, even assuming he wants to, there are reasons to be skeptical: 1) he is too polarizing a figure to lead such a process; 2) Islamists are too embittered by the recent events to accept a compromise; 3) his administration may need an enemy to shift attention away from the sorry state of the economy; and 4) his coalition of revanchist security agencies and Mubarak-era elites see no need to cede ground. Yet, because total victory is not in the offing, for the foreseeable future, Egyptian politics will remain violent, hysterical and unstable. Welcome to office, Mr. President.
Foreign Policy Shaped by Donors
Michele Dunne
Yasser El-Shimy, teaching fellow, Boston University.
Michele Dunne, Senior Associate at the Carnegie Endowment for International Peace.
Two major factors will likely shape Abdel Fattah el-Sisi’s foreign policies in the short term. The first is his fight against the Muslim Brotherhood as well as extremist groups based in the Sinai, and the second is an unprecedented economic dependence on Saudi Arabia. The two factors are linked, due to a convergence of interests between the Egyptian military and the Gulf states. Sisi needs the Gulf’s financial support to strengthen Egypt’s faltering economy and bolster his position vis-à-vis the Brotherhood. The Gulf needs Sisi to defeat the Brotherhood, hoping that will stave off political agitation by Brotherhood-affiliated groups in their own countries.
Egypt has relied increasingly on Gulf economic assistance since the 2011 uprising, as the government spent its reserves in order to sustain high social spending and support the Egyptian currency amid the political turmoil that followed Mubarak’s removal. In the first 18 months of the transition, during which the Supreme Council of the Armed Forces (SCAF) held control, Egypt received only about $2.3 billion in assistance from Gulf States (Saudi Arabia, Qatar, Kuwait) despite pledges of at least $7 billion. During the Morsi presidency, Qatar stepped up to provide some $8 billion in grants and soft loans, a fact that provoked widespread concern and satire in Egypt about dependence on Gulf assistance.
Since Morsi’s ouster in July 2013, Qatar is out as Egypt’s patron, and Saudi Arabia, the UAE, and Kuwait are very much in, a trend that seems likely to accelerate during a Sisi presidency. By early 2014, the military-backed government had received some $12 billion in various forms of assistance (including cash, petroleum, projects, and Central Bank deposits to support the Egyptian pound) from the three countries, with much more expected to arrive soon. In fact, the key initiatives of Sisi’s campaign to emerge so far are Gulf-financed economic megaprojects (one in housing, another in development of the Suez Canal zone) with extensive military involvement. There is every indication that Sisi will continue to depend on infusions of cash and/or energy of roughly $2 billion per month from the Gulf in order to keep his government afloat and minimize the country’s ongoing energy crisis.
So, how will President Sisi’s heavy and unprecedented dependence on Gulf assistance affect his foreign policies?
Already there has been one indication that Cairo will not be able to stray far from policy lines delineated by Riyadh while this high level of economic dependence continues. When Sisi first deposed Morsi, the transitional government quickly moved away from Morsi’s support for the Syrian revolution and adopted a different approach, saying it would no longer support “jihad” in Syria and notably targeting Syrian refugees in Egypt as potentially dangerous subversives. By the time of the Arab summit in March 2014, the Egyptian government quietly brought its position on Syria more into line with its Gulf allies, noting its ongoing “contacts” with the Syrian opposition and the Gulf states.
The great unknown about Egyptian foreign policy remains whether relations with the United States will deteriorate, limp along, or strengthen during a Sisi presidency. The United States has its reservations about Egypt’s current course but would like to find a way to sustain relations, and Sisi presumably would like to restore suspended U.S. military assistance in order to keep his generals happy. But Saudi Arabia not only offered to replace U.S. military assistance but apparently also to finance arms purchased from Russia. Thus Egypt is becoming a pawn in the tense relations among Washington, Moscow, and Riyadh.
In his brief speech announcing his presidential bid, Sisi sounded well-worn themes about foreign policy including the need to restore Egypt’s “strength, power, and influence” in the world and its rejection of foreign meddling (“Egypt is not a playground for any internal, regional, or international party and it never will be”). But in a moment of candor, he also hinted that this high level of dependence on the Gulf cannot and should not be sustained, saying, “Egypt is a country rich in its resources and people, yet it relies on donations and assistance. This is not acceptable…”
It remains to be seen whether Sisi will undertake the internal reconciliation and courageous political and economic decisions that would allow Egypt to move beyond such dependence.
How Will Sisi Use His Popularity?
Wael Nawara
Wael Nawara, Al-Monitor columnist, writer, strategist, and co-founder of Al Dustour Party and the National Association for Change.
Egyptians may benefit from a popular president who is disciplined, has experience managing a real job other than giving moving speeches, and can help the people confront some sobering economic realities. Coming after a great revolution against a corrupt regime and its cronies, an uprising which called for social justice, it is going to be difficult to tell Egyptians that they need to implement some harsh reforms and take more responsibility in picking up the country’s economy from its current plunge. Within the atmosphere of deep polarization there are those who are against Sisi—despite his popularity with the majority of Egyptians—and would do everything to make his presidency fail.
On the security front, Sisi spent his entire professional life as a soldier and for several years he was head of military intelligence. But it remains to be seen whether his ascent to power could compel the Muslim Brotherhood to finally accept Egypt’s new reality, or will it further alienate them, making them more entrenched in the path of revenge and violence—prolonging the conflict and jeopardizing the country's chances of restoring a measure of stability necessary for recovery of tourism, investment, and the economy.
Sisi is undeniably very popular. But how he will use his popularity and guard his political capital? Balancing unpopular reforms with quick wins will determine his success.
On the political front, he would need to take measures to resuscitate the democratic process from clinical death, strengthening political parties and allowing sufficient space for a healthy opposition—rather than repeat Sadat’s mistake, forming or allying himself with a political party which is born in power, thus incarcerating political life which will then be reduced back to a single party monopoly. Other important questions facing Sisi include whether he will seek to empower a respected parliament, cultivate an independent judiciary, and allow vibrant media, or nullify these institutions and reduce them to satellites broadcasting a singular voice, his own. In his resignation speech, Sisi mentioned the “flabby” government apparatus, but will he be able to streamline and modernize that seven-million-employee institution? And will his popularity allow him to survive the repercussions when Egyptians experience the social, economic and political cost of restructuring? If successful in the elections, he will have the chance to become an inspiring force for people to actually work and take responsibility of their own lives. But Egyptians will have to be patient for the fruits of change are not born overnight. There is surely a risk that high expectations coupled with slow achievements could exhaust his political capital and lead Egyptians to become impatient unrealistically demanding that things are instantly fixed.
Sisi has made it clear that he believes that Egypt can once again become a great country, but how will he achieve that? His speeches showed courage of a man unafraid to level with the people and tell difficult facts. He talked about the challenging economic realities and the need to work hard to rescue the country’s economy. He warned that he had no magic wand and that rebuilding is everyone’s duty and responsibility. But courage in talking is one thing and implementing actual (inevitably unpopular) reforms is another.
During the coming days and weeks Egyptians will hear many promises from different presidential hopefuls. But promises are only words, often given by candidates who have little or no chance of winning and as such can be too generous. But it is not by words that Egypt can pass through this painful bottleneck. The answers to the tough questions above will reveal themselves through Sisi’s actions if and when he becomes Egypt’s next president.
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